Lululemon Athletica Inc.’s rough year continued as the once fast-growing apparel chain slashed its outlook on weakening demand and the Trump administration’s tougher trade policies. The retailer’s shares tumbled 19% in premarket trading on Friday, deepening a decline this year that had already erased $22 billion in market value. The Vancouver-based company warned Thursday that it will take a $240 million hit from President Donald Trump’s decision to end the de minimis exemption. The policy had helped Lululemon ship many of its US e-commerce orders under $800 duty-free from Canada. The retailer now projects sales in the range of $2.47 billion to $2.5 billion for the third quarter, lower than Wall Street had anticipated. For the full year, Lululemon lowered both its revenue and earnings per share outlook. The economy is complicating Chief Executive Officer Calvin McDonald’s efforts to win back investors after the stock had fallen 46% so far this year through Thursday’s close. Those struggles erased gains made during the pandemic, when shoppers flocked to comfy clothes and the brand enjoyed years of rapid growth. Now Lululemon, which is known for its pricey leggings, also must win back value-driven shoppers who are spending less and are more willing to try newer brands. Its results Thursday underscore how many headwinds the retailer faces — and how impatient investors have become — as it tries to return to faster growth. Under McDonald, Lululemon is raising some prices to deal with levies. He’s also been working to streamline the retailer’s organizational structure. The company laid off 150 corporate employees in June, trimming staff at store support centers. Comparable sales for the second quarter grew 1%, missing Wall Street’s expectation of almost 3% growth. The robust growth during the Covid-19 pandemic that boosted Lululemon’s revenue 140% in four years has dissipated. Younger rivals such as Alo Yoga and Vuori are grabbing market share. Like the rest of the apparel industry, Lululemon is also trying to balance tariff costs and maintain its bottom line. “We’re seeing fatigue with the consumer, particularly our high-value consumer who’s been with us longer,” McDonald said in a call with analysts. He said the company has let product life cycles become too long while consumers are seeking newer options. “The blunt truth is that Lululemon is no longer the challenger,” Neil Saunders, managing director of GlobalData, said in an email. “It is now the brand that other, younger labels look to hunt and take share from.” The company is embarking on a big marketing shift by betting on a roster of athletes can both revive the yogawear brand’s sales and help it grow beyond its downward-dog facing roots. American tennis star Frances Tiafoe is wearing Lululemon apparel at the US Open, and golfer Max Homa dons the brand’s gear on the PGA Tour. 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Lululemon faces increasing challenges due to low consumer demand and the impact of Trump-era policies.
